Tax cuts were the theme for the top two contenders in the first week of the federal election. Both Pierre Poilievre and Mark Carney promised to cut income taxes, carbon taxes (to different extents), and GST on new home purchases. The parties have identified cost-of-living challenges as a top concern for Canadians, and they are responding to it. People react when they see the direct impacts of policies that hit their pocketbooks.
But politicians need to be speaking about the bigger economic picture. Canada’s growing debt, flatlined GDP per capita growth, and reduced productivity compared to other developed nations are top concerns among those who understand broader economic issues. Unfortunately, financial literacy among the public is in decline, and only a minority of people pay attention to macroeconomic trends. Politicians don’t win by campaigning to the minority, so they pander to the economically indifferent majority. While that may be a winning electoral tactic, Canadians will lose in the long run.
It wasn’t always this way. In the 1990s, it was in vogue for politicians to campaign on fiscal responsibility. Balanced budgets were the priority of the day, and politicians of all stripes pursued that goal. It was an age of austerity as every party, from Alberta’s Conservatives to Saskatchewan’s NDP, balanced their budgets, as did the federal government. Political leaders were applauded by citizens and rewarded at the polls because citizens of the time understood how government overspending could harm them. People knew debt levels were unsustainable and that spending must be reined in.
Today, the word austerity never escapes from the lips of a mainstream politician. Parties are promising massive new spending initiatives while vowing to cut taxes at the same time. Few in the public or media, for that matter, are questioning how such economic policies are viable or sustainable.
Is it because citizens aren’t sufficiently economically literate or because they are indifferent?
It’s a bit of both.
In the long term, we must endeavour to have basic economics entrenched in school curricula. Economic literacy should be considered as essential as other core educational planks, as it serves people well both in household finances and in making electoral decisions when they vote. There are many layers of bureaucracy and government to go through before reaching classrooms, but it must be done.
In the short term, influencers, whether in media, academia, or politics, must find ways to effectively communicate to people about economics. That’s much easier said than done, of course. People’s eyes glaze over quickly when economics come up, and they often instinctively move to quickly change the channel.
It’s hard for nerdy economists to compete with colourful social media influencers, so maybe it’s time to try to partner with them. Long dissertations and lectures on economics aren’t reaching people, but bite-sized portions of dry material could be delivered by interesting people. Re-imagining how to communicate important but dull concepts to citizens should become a goal of communicators. Look to where the eyes of citizens have gone and try to get in front of them.
Avoiding the harsh realities of Canada’s current economic trajectory may be politically expedient, but it will come with a terrible price when the bill comes due. Canada’s government has been living on credit cards for too long, and making the case for fiscal responsibility to citizens can’t begin too soon.
